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under. and the government that basically drove up the deficit and regional governments because region is very important in spain. also drove up this problem with big deficits. and there were not intended to. and so in each one of these you have somewhat of a different reason. the case of italy, a debt to gdp of over 120% and growing and the lack of action and trying to do anything about it by the former government once they came in as a technician, and by the way, technicians are great, but the amount of time is limited because they have no popular support. whether it be greece or italy. and as you know, the elections in italy, and we will see how he does, but you need popular mandates to get these changes really through. i am encouraged in the case of ireland. they're making good progress, getting back to the market, but there are still a lot of problems. the latest victim is cyprus. the banks held a lot of greek paper. they ran up the deficit there, and so they are the latest bailout case that we are going to see. but each country is different, and that leads to what is the same, an
the u.s. government can run its massive deficit is because the federal us have the -- the fedee has the ability to create money and that creates a huge temptation for politicians. with republicans and democrats. i don't believe we can deal with physical policy until we deal with monetary policy. in the early two thousands, the federal reserve had been here a long time. he's getting ready to retire, he wants to go out on a good note. interest rates are starting to be lowered and it creates negative interest rates. you can borrow at less than the inflation rate. right at the end of the term, greenspan realizes that he screwed up and the interest rates create an inverted yield curve. that's a natural and on and on. what it is means that short-term rates are higher than long-term rates. if you're going to make an investment, it is riskier. only the federal reserve can do that. banks make money and created and voted yield curves. the banking business is quirky. which means you can get higher interest rates and a backbone. so they went under this negative inverted interest rate. one reaso
. in addition, deal than the u.s. government cannot massive deficits is because the federal reserve's ability to play funny. today the federal reserve couldn't print money. no time at interest rates with me. i don't think the u.s. could -- and would not be creditworthy if you couldn't print money. that creates a huge temptation for politicians. republicans and democrats. i don't think whether disciplined fiscal policy until monetary policy. the recent financial crisis. in the late 1990s, early 2000, alan greenspan had been there long time, wanted to be a hero. he was getting ready to retire for having the minor correction. greenspan was going to be good note, so he starts lowering interest rates, the effect to printing money. it creates negative real interest rate. so you can borrow dramatically less than the appreciation rate of housing, which incentive a huge investment house in which a prayer at such low interest rates. in right at the end of his term, greenspan realizes he's screwed up and he and his successors to raising interest rates very rapidly and create something: inverted joker. a
, food insufficiency. you. you can't just overcome those kinds of deficits by providing a headstart education program. so that is where the book began and most of the people advised me and said it's an interesting book and i'm sure you'll get on fox tv. that was not my goal. my. my goal was not to be a critic. i said well, okay let me depart two of the book. there are some social programs that are really quite effective and maybe we can learn a lesson from that. a big quiz in the course of writing the book that i conducted and bored to death my wife and children was let me sit down with everybody and tell me the three government programs that have been the most effective in the last 65 years. almost every one of my academic friends with a headstart and i would say wrong. no evidence. the most effective government program in chronological order our social security, the g.i. bill of 1944 and medicare in 1955. there will be some pushback about that. even "usa today" had an editorial this week is that social security is a pay-as-you-go program. no, it's not. i can never go broke provide
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